Google Maps to Navteq: We’ll build ‘em with People Power

The recent purchase of NavTeq by Nokia has the potential to have incredible impact in the mobile and internet map worlds. The implications go beyond technology into social and political issues. Minimally the technology will give the largest cell phone manufacture dramatically increased technology in the mapping arena. Maps are the logical future of local mobile search. As location based information takes off, Nokia will be well positioned. Certainly since Google and Yahoo depend on this mapping technology the buyout could affect both internet and mobile use dramtatically.

In this recent Forbes article, Bruce Upbin makes the point that Nokia is unlikely to rock the boat on any exisitng contracts as they will very much need the income to pay off the price paid for NavTeq (50 times earnings).

As for Google and Yahoo’s plan he says:

Web players including Google and Yahoo! (nasdaq: YHOO – news – people ) have less to fear from Nokia owning the service that provides their digital maps — they have long-term contracts with the map databases and they never paid that much anyway. Navteq earns a license fee of about $12 a year per subscriber from Verizon (nyse: VZ – news – people )’s VZ Navigator wireless navigation service; Verizon’s customers pay about $120 a year for the service. From Google maps on a phone, Navteq maybe makes 50 cents per lookup. That favorable pricing structure could change. Nokia said in its conference call Monday that it plans to continue working with all existing partners; it has little choice if it’s going to earn back the money it will pay for Navteq.

But Google is hedging its bets. Michael T. Jones, chief technologist of Google Earth, Maps and Local, says the company never considered buying Navteq. Instead, Google could simply recreate the data far more cheaply by tapping the mapmaking skills of its hundreds of millions of users — a wiki of maps, he suggests.

“Every day more people use our product than watch TV,” he says. “They could go outside their house and draw a line on a map for us.” Drivers wouldn’t dare use such a user-generated map unless it was 100% reliable, but it would suffice for local search. Jones says people in India are already creating digital maps of roads for Google.

Could Google simply recreate the data far more cheaply by tapping the mapmaking skills of its hundreds of millions of users? That seems a stretch.

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